02952cam a22002897 4500001000700000003000500007005001700012008004100029100002200070245019500092260006600287490004200353500001800395520152500413530006101938538007201999538003602071690007002107690006602177690011202243690010002355700001302455710004202468830007702510856003802587856003702625w15308NBER20161209114635.0161209s2009 mau||||fs|||| 000 0 eng d1 aAizenman, Joshua.14aThe financial crisis and sizable international reserves depletionh[electronic resource]:bFrom 'fear of floating' to the 'fear of losing international reserves'? /cJoshua Aizenman, Yi Sun. aCambridge, Mass.bNational Bureau of Economic Researchc2009.1 aNBER working paper seriesvno. w15308 aOctober 2009.3 aIn this paper we study the degree to which Emerging Markets (EMs) adjusted to the global liquidity crisis by drawing down their international reserves (IR). Overall, we find a mixed and complex picture. Intriguingly, only about half of the EMs depleted their IR as part of the adjustment mechanism. To gain further insight, we compare pre-crisis demand for IR of countries that experienced sizable IR depletion, to that of countries that did not, and find different patterns between the two groups. Trade related factors (such as trade openness, primary goods export ratio, especially large oil export) seem to play a significant role in accounting for the pre-crisis IR/GDP level of countries that experienced a sizable IR depletion during the first phase of crisis. Our findings suggest that countries that internalized their large exposure to trade shocks before the crisis, used their IR as a buffer stock in the first phase of the crisis. Their reserves losses followed an inverted logistical curve. After a rapid initial depletion of reverses, within seven months they reached a markedly declining rate of IR depletion, losing not more than one-third of their pre crisis IR. On the contrary, in case of countries that refrained from a sizable IR depletion during the first phase of crisis, financial factors seem more important than trade factors in explaining the initial IR/GDP level. Our results indicate that the adjustment of EMs was constrained more by their fear of losing IR than by their fear of floating. aHardcopy version available to institutional subscribers. aSystem requirements: Adobe [Acrobat] Reader required for PDF files. aMode of access: World Wide Web. 7aF15 - Economic Integration2Journal of Economic Literature class. 7aF31 - Foreign Exchange2Journal of Economic Literature class. 7aF32 - Current Account Adjustment • Short-Term Capital Movements2Journal of Economic Literature class. 7aF42 - International Policy Coordination and Transmission2Journal of Economic Literature class.1 aSun, Yi.2 aNational Bureau of Economic Research. 0aWorking Paper Series (National Bureau of Economic Research)vno. w15308.4 uhttp://www.nber.org/papers/w1530841uhttp://dx.doi.org/10.3386/w15308